Hundi

A hundi or hundee is a financial instrument that was developed in Medieval India for use in trade and credit transactions.

[2] The merchant Banarasi Das Belonging to the Digambara Jain Sect, born 1586, received a hundi for 200 rupees from his father to enable him to borrow money to start trading.

[3] During the colonial era, the British government regarded the hundi system as indigenous or traditional, but not informal.

They were reluctant to interfere with it as it formed such an important part of the Indian economy and they also wished to tax the transactions taking place within the system.

[4] Official hundi forms were produced incorporating revenue stamps bearing the image of British monarchs, including Queen Victoria, and disputes between merchants often entered the court system, so in no way was the system an underground one even though it did not take place through normal banking channels.